Why is the White House Blocking Rules on Energy Efficiency?

Cross-posted at ACSBlog.

“The easiest way to save money,” President Obama declared in his 2012 State of the Union address, “is to waste less energy.”  In his 2013 State of the Union address, President Obama took another step and issued “a new goal for America”: “let’s cut in half the energy wasted by our homes and businesses over the next twenty years.” The President also vowed that if Congress did not “act soon” to address climate change, he would “direct his Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”

Such welcome sentiments! So sensible and right and good! But here is a puzzling fact: at the same moment President Obama was uttering these wise and welcome remarks, his White House was blocking rules to promote the very energy efficiency he was extolling.  Far from urging the Cabinet to come up with executive actions on climate, his own White House was blocking his Cabinet from taking executive actions on climate. That situation persists to this day.

To understand this rather startling state of affairs, we need some background about how the regulatory system works today. Congress has passed laws to increase in many different respects the energy efficiency of the “homes and businesses” the President talked about. Like most complicated contemporary laws, the laws on energy efficiency are implemented by an administrative agency, in this case the Department of Energy (DOE).  DOE writes rules that take the basic mandates given by Congress and give them shape; the agency specifies, for example, just how efficient new refrigerators and microwaves and lamps and buildings must be to meet Congress’s requirements.

Once DOE writes a rule, however, it does not simply issue it. Instead, the rule must first pass through a White House office that oversees the federal rulemaking process – the Office of Information and Regulatory Affairs, or OIRA. Under executive orders reaffirmed or issued by President Obama, no rule deemed significant by OIRA can be issued without OIRA’s approval. In the Obama administration, moreover, OIRA has increasingly become simply a portal into the political machinery of the larger White House. Rules go to OIRA and, from there, to the Domestic Policy Council, the White House economic offices, the White House Chief of Staff, even sometimes the President himself. (The former head of OIRA in this administration, Harvard law professor Cass Sunstein, documents (and lauds) this new reality in his recent book, Simpler: The Future of Government.)

This is how the White House has come to block the very kinds of initiatives President Obama seemed to praise in his State of the Union addresses: energy efficiency rules have gone from DOE to OIRA and have never left.  As of this writing, nine rules from DOE on energy efficiency are stuck at OIRA. Five have been there since 2011, three since 2012. Six are not final rules; they are merely proposals.  Four of the rules are not even economically significant (that is, they do not impose costs of more than $100 million per year). But all of these rules are stuck, all the same.

Why are these rules stuck? Here is another puzzle: in an administration that has made government transparency one of its signature initiatives, the White House process of regulatory review remains stubbornly opaque. Sometimes – contrary to the executive orders under which this process purportedly operates – there is not even a public record of a rule going to the White House. Outside groups interested in energy efficiency discovered this dismaying fact when they submitted a Freedom of Information Act request for cover notes showing that energy efficiency rules had been submitted to the White House; the cover notes showed that rules had indeed gone over, but that fact had not been reported on the public website that supposedly documents rules’ arrival at the White House.

Even when there is a public record that a rule is under review, there is almost never a public explanation of why a rule gets stuck at the White House. Indeed, in this administration, in only one case has the White House publicly explained why it has rejected a rule; that was when President Obama himself directed the Environmental Protection Agency to withdraw its rule revising the Bush-era air quality standard for ozone pollution. Yet, beyond ozone, many, many rules have been stuck for a very long time in the process of White House review and, presumably, a decision has been made to reject them, but there has been no public explanation of what is wrong with the rules.  The executive orders under which regulatory review occurs require such an explanation.  Don’t we – and the agencies that have spent months or even years writing these rules – deserve at least that?

A possible hint about why these rules are stuck appears in Sunstein’s book, when he is trying to explain how the kind of analysis that OIRA demands for rules might be deployed either to accept or to reject a rule on the energy efficiency of refrigerators.  (Two of the energy efficiency rules stuck at the White House now involve refrigerators or freezers.)  Far from demonstrating the tractability and good sense of this analysis, however, Sunstein’s explanation makes clear how easily a demand for detailed analysis can become a game of regulatory Whac-A-Mole: every time the agency meets one demand for a piece of information about the costs or benefits of a rule, it finds itself met with a new and different demand.  In Sunstein’s rendering, the analysis of a rule on refrigerator efficiency would need to discuss how much money consumers save (or lose) when buying a more efficient refrigerator, whether the efficient refrigerator works as well as the inefficient one, whether having efficient refrigerators will make consumers more or less likely to buy new refrigerators, whether consumers would use efficient refrigerators more than they use inefficient ones, how much air pollution is reduced by the enhanced efficiency (and thus lower electricity demand) of refrigerators, how many people would have died or fallen ill if that pollution had not been reduced, and how much these people’s lives are worth in dollars. To top it all off, Sunstein suggests, the agency must even explain why a rule is necessary in the first place, when presumably consumers could choose to buy more efficient refrigerators if they wanted to. 

If this is the essay-writing contest DOE must enter every time it submits an energy efficiency rule to the White House, no wonder these rules are in limbo.

Instead of issuing a new directive on energy efficiency to his Cabinet, President Obama should issue a directive to his White House staff: stop blocking rules promoting energy efficiency.  The Cabinet does not need a presidential directive telling the agencies to do their work; rather, it needs presidential support for the work they are trying to do.